Business confidence in Wales rose over the last six months, according to the latest Business in Britain report from Lloyds Bank.
The research found that confidence – calculated as an average of respondent’s expected sales, orders and profits over the next six months – climbed to 23 per cent, three points higher than in January.
Despite confidence only rising marginally, the net balance of businesses looking to grow investment in the next six months hit a post-referendum high of 17 per cent, five points higher than in January.
The net balance of businesses looking to hire more staff has also risen by 10 points, to 16 per cent, since the start of the year.
The share of firms that reported difficulties hiring skilled labour increased by four points to 41 per cent, and the number expecting to increase pay rose by seven points to 22 per cent.
The Business in Britain report, now in its 26th year, gathers the views of more than 1,500 UK companies, predominantly small to medium-sized businesses, and tracks a range of performance and confidence measures, weighing up the percentage of firms that are positive in outlook against those that are negative.
Mixed picture across the UK
Across the UK, business confidence was highest in London (31 per cent), followed by the South East (30 per cent) while the lowest level of confidence was in the East Midlands (14 per cent) and the North West (19 per cent).
|Region||Jul 2018||Jan 2018||Change (Jan – July)|
|London||31 per cent||25 per cent||+6pts|
|South East||30 per cent||24 per cent||+6pts|
|South West||29 per cent||19 per cent||+10pts|
|West Midlands||29 per cent||28 per cent||+1pts|
|North East||25 per cent||38 per cent||-13pts|
|East of England||25 per cent||18 per cent||+7pts|
|Wales||23 per cent||20 per cent||+3pts|
|Yorkshire & Humber||23 per cent||15 per cent||+8pts|
|Scotland||20 per cent||17 per cent||+3pts|
|North West||19 per cent||31 per cent||-12pts|
|East Midlands||14 per cent||24 per cent||-10pts|
David Beaumont, regional director for Lloyds Bank Commercial Banking in Wales, said:
“There is no doubt that businesses across the UK are facing challenges at the moment, with Brexit uncertainty and concerns over domestic demand highest among them.
“But the fact that confidence is increasing, albeit marginally, does suggest that Welsh firms are becoming increasingly comfortable navigating the political and economic fog.
“It’s also encouraging to see that businesses across Wales are bucking the trend when it comes to investment, with the nation one of the only areas surveyed where the number of firms planning to boost investment and staff numbers in the coming months is growing.”
The uncertainty surrounding the UK’s exit from the EU is now the single greatest risk to Welsh companies in the next six months, cited by 17 per cent of firms.
This was followed by weaker UK demand, which 13 per cent of firms cited as their greatest risk, and input costs, at 11 per cent.
Uncertainty around Brexit negotiations continue
More than a third (36 per cent) of firms in Wales expect a negative impact on their business is of no trade agreement is reached with the EU. A fifth (20 per cent) expect a positive impact, while 43 per cent either do not expect any impact or said they didn’t know.
Confidence begins to grow in sectors that rely on domestic demand
Nationally, business confidence was highest in the transport & communication and construction sectors, with the construction sector in particular registering a significant rise compared with January’s survey, rising 12 points to 26 per cent.
Confidence was lowest in retail & wholesale, and in hospitality & leisure, both of which saw confidence fall since January.